12 June 2014
Dear QRxPharma Limited Shareholder
The Company , QRxPharma Limited has declined to forward to shareholders the enclosed Members’ Statement from interests associated with Mr Lang Walker in support of the resolutions at the General Meeting to be held on July 9th, 2014. Hence we have dispatched this communication to you in order to assist you in making your decision on how to vote.
There is only one way to get a drug such as MOXDUO approved for marketing in the US
And that is with the approval of the FDA.
The QRx Pharma Chairman Mr Farrell was quoted as saying in respect of the Company’s interactions with the FDA:
"What they (the FDA) did in fact, is move the goalposts on us."
"The FDA had changed its tune."
"We have been completely let down by the FDA bureaucracy."
Mr Farrell then asks “ What is the Walker Group's plan to deal with that?"
The answer is to get “new blood” on the QRxPharma Board to:
facilitate a thorough review of the current situation without conflict or compromise ;
work constructively with the FDA on possible trial protocol(s) that may enable the approval process to move forward; and
put an appropriate recommendation to shareholders.
The Walker interests have absolutely no interest in“taking control” of the Company as has been alleged by the QRxPharma Limited Board. The objective of the Walker interests is simply to recover the maximum value possible for all shareholders.
We seek your voting support and ask that you vote “For” all resolutions.
MEMBERS’ STATEMENT
The Directors of QRx Pharma Limited (QRX) have called a General Meeting of shareholders to be held on 9 July 2014, following a request by parties associated with Mr Lang Walker (Walker) on 13 May 2014.
The purpose of the meeting is for shareholders to vote on four resolutions, namely:
1. The removal of Dr Peter Farrell as a Director
2. The removal of Dr Gary Pace as a Director
3. The appointment of Dr Richard Treagus as a Director
4. The appointment of Mr Bruce Hancox as a Director
Walker has proposed the resolutions because it believes it is in the best interests of the Company and its shareholders that the Board, with the inclusion of new eyes and ears, consider all reasonable strategic alternatives as a means to restoring value to the Company and its underlying assets. In the absence of any detailed company-specific information we are not able to expressly recommend any one particular strategy. We do nevertheless have a strong view that the alternatives should be reviewed and carefully considered by a Board which includes individuals who will bring the requisite level of experience as well the necessary objectivity and independence to the review process.
The current Board of Directors has been involved in all decisions that have led to a series of failed outcomes and unsuccessful interactions with the United States Food and Drug Administration (FDA) over the last three years. During a capital raising in late 2009 the Company provided guidance that MoxDuo would be launched and made available to patients in the US during 2011. Despite not achieving what had been foreshadowed, the Board subsequently elected to raise additional capital of $47M.
As at June 2014 MoxDuo has yet to be approved by the FDA, and the Company has a market capitalisation of $15M with cash reserves of approximately $12M.
We therefore have a well-founded view that it is in the best interests of all shareholders that the current Board composition needs to change for any new alternatives to be fully and properly assessed.
By way of background, the first New Drug Application (NDA) for MoxDuo was filed with the FDA in August 2011 with a PDUFA (Prescription Drug User Fee Act) date of June 2012. At that time the Company was extremely confident of receiving marketing approval for MoxDuo. However, this confidence was shown to be ill-founded when on 25 June 2012 the FDA did not approve the NDA, and instead issued a Complete Response Letter, that is, a marketing approval rejection.
The Company engaged in dialogue with the FDA over a period of six months and in February 2013 filed a second NDA for MoxDuo. The Company was again very confident of receiving marketing approval. The FDA advised that they would refer the NDA to an Advisory Committee scheduled for July 2013.
The Company failed to identify issues with some of the data that had been submitted to the FDA, which lead to the Advisory Committee meeting being postponed. Then in August 2013, the FDA did not approve the NDA, and instead issued a second Complete Response Letter.
Once again the Company engaged in dialogue with the FDA and in November 2013 filed a third NDA for the approval of MoxDuo. The Company was aware that this NDA would also be subject to the Advisory Committee process. The Company was once again very confident of the success of the application.
“We are confident that our refiled NDA will confirm the validity of the data defining the product's respiratory safety advantages…
We were encouraged by our candid dialogue with the FDA throughout this process..“ (Dr John Holaday - former CEO)
The Advisory Committee met on 22 April 2014 and based on the information that was tabled, it voted unanimously (14-against and 0-for), and did not recommend that the FDA grant marketing approval to MoxDuo.
On 26 May 2014 the FDA issued the Company with a third Complete Response Letter for MoxDuo and stated;
“there was not sufficient evidence to support approval of MoxDuo at this time“ (US-FDA).
Hence, over a period of two years and nine months (Aug 2011-May 2014) three NDA’s have been filed and three Complete Response Letters (rejections) have been received.
The Company has previously communicated to shareholders that is has diligently followed FDA guidance at all times. Following FDA guidance would usually involve the Company entering into a Special Protocol Assessment with the FDA. However, the nature and extent of the protocol agreement the Company reached with the FDA remains unclear.
The Company has consistently emphasised the positive feedback and the extent of co-operation it has received from the FDA. In fact, contrary to this, it is now on the public record that the Company lodged a formal dispute with the FDA over the issuing of a Complete Response Letter in 2012. On appeal, the FDA's decision and the Complete Response Letter were upheld. As recently as 22 April 2014, senior company representatives of the Company were publicly critical of the FDA's review process, as well as the ability of the reviewers to grasp the unique aspects of the MoxDuo marketing application. From the recent information provided by the FDA to the members of the Advisory Committee it is very clear that the FDA had in fact an entrenched and negative view of the suitability of MoxDuo for marketing approval. The FDA was quite obviously not at a point where it was ready to give approval, despite the Company's firm belief to the contrary.
There would appear to be a serious breakdown or misunderstanding in communications between the Company and the FDA and a concerning level of mistrust.
Despite the Company's stated intentions to submit a MoxDuo marketing application to the European Regulatory Authority in the first half of 2012, no demonstrable progress to that end has been made.
The Company has repeatedly emphasised the effectiveness of its drug development, regulatory and commercialisation activities.
"In just four years, we have successfully moved MoxDuo IR through clinical trials and NDA submission by demonstrating its effectiveness and safety. Achievement of this milestone clearly establishes the value of this Dual Opioid product to patients and prescribers as well as potential partners. The timeframe and capital efficient manner in which these milestones were achieved are impressive accomplishments compared to industry development and cost benchmarks." (Dr John Holaday, Former-CEO)
At best this represents unrealistic optimism, or worse, it may represent a pattern of flawed judgement. Shareholders, have every reason to feel deeply aggrieved by the glaring discrepancies between the Company's own statements of progress and the reality as we now know it to be.
As recently as 19 May 2014 the Company released new information reviewing the current status and setting out what it described as
“Next Steps for QRx Pharma“. This outlines a new drug development plan, the conduct of further clinical trials, a new NDA application, and a period of approximately three years through to a potential new PDUFA date. An approximate $45–50M of funding will be required by the Company in order to execute on this proposed plan.
It is quite clear that those who may put forward the required funding, in whatever form, will own the vast majority of the Company, while current shareholders' interests, unless they contribute to the funding, will be severely diluted.
Given the events of the last few years, we are unable to support any proposed plan unless it is reviewed and endorsed by a newly comprised Board. We strongly believe that introducing “new blood “to the Board of Directors is the best way forward for the Company and its shareholders at this critical time.
We seek your support in voting and ask that you vote “For” all resolutions.
